For Andrew's Electronic Instruments, calculate the interest coverage and net profit ratio. Is Andrew's business healthy? Income
Question:
For Andrew's Electronic Instruments, calculate the interest coverage and net profit ratio. Is Andrew's business healthy?
Income Statement for Andrew's Electronics for End of Year2004 (thousands)
Revenues
Operating revenues
Sales $395
(Minus) Returns -15
Total operating revenues 380
Non-operating revenues
Interest receipts 50
Stock revenues 25
Total non-operating revenues 75
Total revenues, R 455
Expenses
Operating expenses
Cost of goods and services sold
Labor 200
Materials 34
Indirect cost 68
Selling and promotion 20
Depreciation 30
General and administrative 10
Lease payments 10
Total operating expenses 372
Non-operating expenses
Interest payments 22
Total non-operating expenses 22
Total expenses, E 394
Net income before Taxes, R - E 61
Incomes taxes 30
Net profit (Loss) for the year 2004 31
DepreciationDepreciation is an important concept in accounting. By definition, depreciation is the wear and tear in the value of a noncurrent asset over its useful life. In simple words, depreciation is the cost of operating a noncurrent asset producing...
Step by Step Answer:
a Interest coverage total income interest payments 455 394 2222 377 This is a good ratio i...View the full answer
